October 29, 2007

Here's a look at the 30-year Jumbo mortgage trend from bankrate.com. And now you know why the sh*t is really hitting the fan now.

And that's the rate for the 50% of people who can still get a loan in the first place...

Remember folks, our incompetent and reckless Fed doesn't control mortgage rates when they lower the discount rate.

When foreign investors lose confidence in our currency, interest rates are going to soar even higher.


Lending criteria tightened. Buyer pool down. Inventory up. Interest rates up. Home prices down. Sheeple slaughtered. And we go right back where we started from (and lower).

It hath been foretold.

14 comments:

Frank@Scottsdale-Sucks.com said...

Awesome.

Better deals for cash buyers. Oh I am so happy I rode this one out....

Andrew from Russia said...

Gotta love the term "jumbo mortgage"! It's like marketing a 5-liter "jumbo gulp" of undiluted ethanol - something clearly unhealthy - with a slogan "Are you tough enough?"

Anonymous said...

Keith, One thing to add, the jumbo rate is the mortgage rate that is not distorted by the gov't's GSEs which artificially have lower mortgage rates because of the mis-perception that if loans backed by them go bad uncle sugar will step up and support them. The only loans backed by the Gov't are FHA & VA, yet ironically they often have rates at or near market rates!!

Starting to see price slip here in NoVA where its supposedly different due to all the jobs generated by uncle sugar. Short sales are leading the new down cycle in price, because gov't jobs just cannot support payments on inflated valuations used to borrow against cr@pbox THs & condos when Toxic ARMs adjust upwards!! Places that were going for over 500k at peak and mid to upper 400's once the bubble burst are now on the auction block/REO/Short sale for the low 400's and they are still overpriced relative to their P/E!! Just another bull trap on the way to the reversion to the mean, but nice to see!!!

Anonymous said...

It seems we are building up a head of steam before we crash into the wall. Oh well makes for a more spectacular explosion when it comes.

On a lighter note just saw Wiley Coyote fall off a cliff with a US dollar in his hand. He is falling much faster than with an anvil.

Sequoia512

Anonymous said...

Great post, thanks.

jorghis said...

Um, yeah, when I went to that site I saw it fall all the way back down to being a premium over the traditional 30 year fixed but not a huge one. Your graph only has it extending to the end of september. Bankrate shows pretty clearly that the rate, while still above that of a regular 30 year fixed came back down to earth in October. All that graph shows is that rates were super high during that whole credit crisis a few months ago.

Francois-Guillaume said...

it makes much more sense for a bank to write a mortgage @ 7% now the collateral is repriced 30% down from its peak. its a much SAFER investment....
the problem is all the bad loans....

Happy Homedebtor said...

I'm wondering when someone will come up with "gap insurance" for houses. ;)

We're about even on our house after factoring in a 20% drop, and we didn't put a dollar down. (Maybe $20K into it via fence/patio/window treatments/paint/etc) We're done with everything but paint and molding/trimwork now, which is also a hobby and adds value. If things completely implode, we'll walk away and buy something else if they don't reduce our balance on the loan. Wife's not on the mortgage, so her credit won't get touched if it comes to that - L2PlanAhead!

Anonymous said...

jorghis said...

Um, yeah, when I went to that site I saw it fall all the way back down to being a premium over the traditional 30 year fixed but not a huge one. Your graph only has it extending to the end of september. Bankrate shows pretty clearly that the rate, while still above that of a regular 30 year fixed came back down to earth in October. All that graph shows is that rates were super high during that whole credit crisis a few months ago.

October 29, 2007 12:36 PM
-------------
Umm, your post is predicated on the false assumption that the credit crisis is over. Basically what you're saying is that the proper pricing of risk has already passed in just 30 days and that we are almost back to our old ways in improperly pricing in risk for a pdt that does not have even the appearance of a safety net from Uncle Sugar!!

honica jewinski said...

Shit, 6.9% aint bad at all for a jumbo loan. These will be in the 10's or so in the next couple years.

Anonymous said...

That was September Keith. As of October Jumbos are back down to 6 3/8% to 6 1/2%. Jumbos are generally defined as meeting all agency requirements except the loan amount is above threshold.

Anonymous said...

THE DESTRUCTION OF THE DOLLAR IS PROPING UP HOUSE PRICES. NO SALES BUT PLENTY PRICE

Anonymous said...

Can we quit talking about sheeple being slaughtered now and move on to the next stage : SANE HOME PRICES!!!! This is GOOD NEWS!!! Very good news. The sheeple are *so* yesterday. Let's forget about their stupid a$$es now.

Anonymous said...

Housing Prices will not stay or go up because of inflation. This is a false assumption. Severe Deflation is just starting and will continue for a long time. For those who question this , look at Japan. When
demand goes down then so do prices.
Don't hold your breath for inflationary home prices.

Remember Pogs, Baseball Cards, Tulips, Cabbage Patch Kids, previous housing downturns, most people will run from real estate when reality hits. The mania will go in the other direction...... check back in a year to prove me wrong.